Quote:
Originally Posted by darkfroggy
(Post 7156714)
WTF?
Free trade makes things better off for EVERYONE. You do know that tariffs on goods makes it WORSE for the economy. If the Chinese can make applicanes more efficiently than everyone else, then it makes sense to leave it to THEM. The US can focus its energy on MORE productive ventures (research, oil production, anything).
Farmers lose jobs? Buddy, this is nothing new. The amount of people in the agricultural industry has been decreasing steadily over the last century. This is thanks to improvements in technology, which allows us to get a higher overall yield with less work. Thus, the decline in farmers.
You want consumers to pay much higher prices so a few farmers can keep their jobs? This is grossly inefficient and hurts the economy to help a select minority. Having less people in agriculture frees them up to work in other sectors of the economy which need the labour such as construction or medical sciences.
If you want an example of how tariffs screw everyone over, just look at the Great Depression.
Sorry if sounded defensive. Ask any economist if free trade is a good thing, almost all will say yes.
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Your explanations work well in the classroom but do not hold up in the real world. Neo-liberals have done great work in brainwashing society into thinking that free-market fundamentalism is the answer to all our economic problems.
Inconveniently however, reality paints a very different picture. EVERY SINGLE developed country (the only possible exception being Hong Kong) has risen on the back of massive government involvement in the economy. Government intervention defined as: high tariffs, very liberal income redistribution policies, huge government investment in key sectors, etc.
Case in point, when the United States was in its developmental phase, it was extremely protective of its young economy. It had in place very high tariffs to limit imports from the more advanced European countries. In the 20th century, the government invested billions into obscure technologies like the micro processor and what is now known as the internet. The apex of the American economy was in the 50's and 60's when the American economy virtually rivaled the rest of the worlds' economy combined! This era was characterized by very protectionist measures (i.e. high tariffs), high/progressive income taxes (the top tax rate was 90%!), high investment in social programs (i.e. the GI Bill), etc, etc.
In more recent times, the Four Asian Tigers (namely, Taiwain, Singapore, South Korea, and to a extent Hong Kong), the "Miracles of the East" rose on the backs of very protectionist governmental policies. Taiwan, Singapore, and South Korea took extreme measures to limit imports. In their developmental phase, they limited imports to only things that they absolutely required and forbade almost everything else (South Korea even limited foreign cigarets!). In the ensuing decades, these countries poured every last resource into developing their key industries/companies (cars, ships in South Korea, electronics in Taiwan). It is only very recently that these countries have begun to open up their economies to foreign competition. Their timing is not accidental, these countries opened up only AFTER their industries and economies matured to a level they feel that can compete with the west.
Guess where they got their economic blueprint from? Japan! These countries are now serving as working models to many other developing countries, the most notable being China!
Now turn to countries that adhered to 'Reganomics,' namely countries in South/Central America and Russia. South/Central America has had neo-liberal economic policies forced upon their governments for nearly a century and today they are the economic backwater of the western hemisphere. Not too long ago, many of these countries had very respectable per-capita-GDPs (i.e. Argentina once had one of the highest per-capita-GDPs in the world!). On a similar note, after the collapse of the Soviet Union, the Russian gov't asked the Americans to assist in restructuring their economy. The Americans counselled the Russians to open up their economy and let the free market 'do all the work.' We all know what happened after: all hell broke loose! The standard of living today for many Russians is WORSE TODAY than when they lived under communist rule! The only positive that came out of this fiasco was that the world took note and notably, China, took a very different path to transitioning their economy.
Turning back to the United States, the only reason why it's agricultural sector is 'competitive' is because they receive hundreds of million$ of dollar$ in subsidies every year. These mega-corporations then in turn lobby the US government to force other (mostly destitute countries like India, Mexico, Haiti, etc.) to adhere to "free-market" fundamentals. That is, to allow for unrestricted imports of American produce at artificially low prices (Dumping in economic jargon). The result is the devastation of millions of farmers in these countries. They are then forced to migrate, oftentimes illegally to foreign lands where they hope to find sustenance (i.e. Mexicans crossing into the US looking for jobs). Today, in India hundreds of farmers commit suicide because they can't compete with imported (heavily subsidized) produce from the United States. Disgracefully, Reganomics hasn't worked too well for the majority of Americans either. Today, the United States' middle class is shrinking by the day, its manufacturing sector is in tatters, its imports far more than it exports, and it has become the world's largest debtor despite decades of neo-liberal policies (beginning with Ragan). The only group that has benefited are those belonging to the top 10% of income earners, the standard of living for the remaining 90% has either stagnated or declined.
Contrast this to Germany. The country limits the ability of industry to offshore its manufacturing base and has also put in place some of the worlds toughest regulations which effectively limits much foreign imports. Japan has adhered to a even more isolated stance. Critic all you want about these these "protectionist" (socialist in American terms LOL) countries but its undeniable that they have some of the highest standards of living in the world!
Lastly, your reasoning for the cause of the Great Depression is also fallacious. It was not caused by protectionist policy. Even Milton Friedman, the godfather of neoliberalism in the United States, acknowledges that the prime factor was 'cheap money.' That is artificially low interest rates set by the Federal Reserve which in turn encouraged irresponsible borrowing and speculation in the marketplace. Which btw, is exactly what caused the Sub-Prime Crisis of '08. Greenspan himself testified that the neoliberal paradigm has been proven flawed,and that he, his life's work, proven WRONG!
